explain what is meant by the opportunity cost of a choice
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Opportunity cost Opportunity cost is a key concept in economics, and has been described as expressing the basic relationship between scarcity and choice. The notion of opportunity cost plays a crucial part in attempts to ensure that scarce resources are used efficiently.
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What Are Opportunity Costs? In some cases, the notion of opportunity cost includes only these forgone alternatives, whereas in others the term opportunity cost refers to the total of this type of cost and more typical explicit monetary costs.
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- Costs can be classified for decision making. Costs are important feature of many business decisions. For the purpose of decision making, costs are usually classified as differential cost, opportunity cost, and sunk cost.n general the difference (cost and revenue) between alternatives are relevant in decision making. Those items that are the same under all alternatives can be ignored. The accountant's differential cost concept can be compared to the economist's marginal cost concept.
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- The principle of opportunity cost can be made more vivid by using a production possibility frontier. This is a graph which shows the possible combinations of goods that a producer can manufacture given the available resources and the current level of technology.
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- In microeconomic theory, the opportunity cost of a choice is the value of the best alternative foregone, where a choice needs to be made between several mutually exclusive alternatives given limited resources.: Suppose you have a free ticket to a concert by Band A. The ticket has no resale value. On the night of the concert your next-best alternative entertainment is a performance by Band B for which the tickets cost $40. You like Band B and would usually be willing to pay $50 for a ticket to see them.
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Opportunity Cost If your next-best alternative to seeing the movie is reading the book, then the opportunity cost of seeing the movie is the money spent plus the pleasure you forgo by not reading the book. The word “opportunity” in “opportunity cost” is actually redundant.
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Economics Help?!!? Ok... here is the whole question: What is an opportunity cost? How does the idea relate to the definition of economics? Which of the following decisions would entail the greatest opportunity cost: Allocating a square block in the heart of New York City for a surface parking lot or allocating a square block at... show more Ok... here is the whole question:
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What is law of increasing opportunity cost? The Law of Increasing Opportunity Cost that is shown in a Production Possibilities Curve is concave to the origin. This is because it shows the maximum gain of two product … s used in production.
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- That entails, apart from transition and administration costs, an opportunity cost. This is not a matter of opinion, it is an economic fact -- the money moved from point A to point B cannot be used on what it would have been used for had it remained at point A.
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- Opportunity Cost and Monetary Cost. The opportunity cost of a decision is the value of the next best alternative this decision forces a person to do without, while the monetary cost is the market price of goods.
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opportunity cost Legal Definition of opportunity cost. : the cost of making an investment that is the difference between the return on one investment and the return on an alternative.
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- View Full Document. A firm’s opportunity cost of production is the sum of the explicit costs and implicit costs. Normal profit is part of the firm’s opportunity costs, so economic profit is profit over and above normal profit. This preview has intentionally blurred sections.
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Opportunity cost The New Oxford American Dictionary defines it as the loss of potential gain from other alternatives when one alternative is chosen.. Opportunity cost is a key concept in economics, and has been described as expressing the basic relationship between scarcity and choice..
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What Are Opportunity Costs? Updated August 01, 2016. Unlike most costs discussed in economics, an opportunity cost doesn't necessarily involve money. The opportunity cost of any action is simply the next best alternative to that action - or put more simply, What you would have done if you didn't make the choice that you did.
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- Production Possibilities Curve. The slope of the production possibilities curve is the opportunity cost of the good measured on the horizontal axis, which in this example is storage sheds. Opportunity cost values for segments between each pair of points is presented on this production possibilities curve.
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Shared Flashcard Set a phrase expressing the idea that a country that decides to produce more military goods (guns) has fewer resources to produce consumer goods (butter) and vice versa Term opportunity cost
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- Mineral oil hydrocarbons (MOH), or mineral oil products, considered in this opinion are hydrocarbons containing 10 to about 50 carbon atoms. Crude mineral oils are by far the predominant source of the MOH considered, but equivalent products can be synthesised from coal, natural gas or biomass.ollowing a request from the European Commission, the EFSA Panel on Contaminants in the Food Chain (CONTAM Panel) was asked to deliver a scientific opinion on mineral oil hydrocarbons (MOH) in Food.
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- Calculate the opportunity cost. The opportunity cost is the difference between the most lucrative option and the chosen option. In the above example, the most lucrative option is investing in the securities, which has a potential return of $12,000. The option the company chose, however, was to invest in new equipment, for a return of $10,000.
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- The proposition that opportunity cost, the value of foregone production, increases as the quantity of a good produced increases. This fundamental economic principles can be seen in the production possibilities schedule and is illustrated graphically through the slope of the production possibilities curve.
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Which is the best example of opportunity cost? A country that chooses to export bananas but not wheat. A country that chooses to invest in manufacturing and agriculture. A country that chooses to specialize in producing paper products. A country that chooses to export all its products. 2016-03-29T08:35:28-04:00. Example of opportunity costs: A country that chooses to export bananas but not wheat. When you say opportunity costs, meaning you're having different decision that might give you more opportunity to prosper and grow. Report.
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How to Calculate Opportunity Cost Let's start by looking at it from the corn perspective. The opportunity cost of producing 50 tons of corn is equal to how many tons of beef we could have produced, which of course is 25 tons. Therefore, the opportunity cost is found by solving this equation: 50 tons of corn = 25 tons of beef. What we really want to know is how much beef we could have produced if we choose to produce 1 ton of corn, but the question gave us 50 tons.
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- On Economic Education, since the PACED decision-making model parallels. the model used in this series. It is important that the students understand the. concepts of trade-offs and opportunity cost if they are to become rational. decision-makers. The concepts of trade-offs and opportunity costs help students to.
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- Ch 1. Scarcity, Choice, and The Production... 1  Economic Scarcity and the Function of Choice 6:07. 2  Opportunity Cost: Definition & Real World Examples 6:43. 3  6:11 Next Lesson. 4  Applying the Production Possibilities Model 10:57. 5  Shifts in the Production Possibilities Curve 8:00. 6  Opportunity Cost: Formula & Analysis 6:00.
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Production Possibilities Curve and Law of Increasing Opportunity Cost Many resources are better at producing one good than at producing others. This lack of perfect flexibility, or interchangeablility, on the part of resources is the cause of increasing opportunity costs. Term: Law of increasing opportunity costs As the production of a good increases, the opportunity cost of producing an addi­tional unit rises.
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Macro economics- What is the economic rationale for the law of increasing costs? The law of increasing opportunity costs is reflected in the shape of the Production Possibility Curve. The curve is bowed out, which shows that when an economy wants to produce more of one product it must give up successively larger amounts of the other products it makes.
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Definition of 'opportunity cost' Business school applications have surged this year, though this partly reflects the economic downturn, which reduces the opportunity cost of taking time out from a career to study. The opportunity cost of holding money rather than buying bonds or some other interest-bearing asset is the nominal interest that would otherwise be earned. An opportunity cost is the cost of not being able to do other things with time and resources because of doing the chosen activity.